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The medium-term outlook for Belgium is pointing towards a GDP growth rate of 2.2% during the 2004-2009 period, which is slightly higher than potential (2.0%). This favourable development is due to both net exports and domestic demand. Private consumption should become more dynamic during the 2005-2009 period, particularly thanks to the increase in households’ disposable income (especially due to tax reforms and increases in employment and social benefits). Investment growth should attain 2.9% during the 2004-2009 period, mainly reflecting the increase in business investment. After ini-tially accelerating in 2004, average export growth should be 5.4% and the contribution of net exports to GDP growth should be 0.2%. Thanks to limited increases in wages and import costs and a negative output gap during the first few years of the projection, the inflation rate will remain below 2% in the medium term.
The development of employment should reflect the favourable macroeconomic context, the limited in-creases in wage costs and various policy measures. After net losses in 2002 and 2003 and the creation of almost 9,000 jobs in 2004, about 30,000 jobs should be created every year during the 2005-2009 period. Industrial employment should fall by 44,000 persons during the 2004-2009 period and the number of jobs created in market services should exceed 200,000. Nevertheless, given the increase in the labour force (mainly in the 50-64 age class) the number of unemployed will barely decrease at all. The unemployment rate (broad administrative statistics) is still increasing in 2004 (from 14.1% to 14.4%), but will subsequently fall to 13.5% in 2009.
The public accounts are expected to show a clear deterioration, with a net public sector borrowing re-quirement appearing in 2004 and widening to 1.4% in 2006 before gradually declining to 0.7% by the end of the projection period.
The increase in international competition and the openness of European economies has gone hand in hand with a rapid and significant fall in industrial employment, a decrease that has not yet reached its end. If past trends were to continue, employment in the manufacturing sector would account for less than 5% by 2025. During each recession or period of lower economic growth such as the one we are currently experiencing, employment in manufacturing decreases but demonstrates no resilience when growth returns. Is international competition the cause of this deindustrialisation?
What is meant by deindustrialisation? It refers to a decline in the share of manufacturing employment and value added (see Graph 1). Moreover, for most countries, it also means a reduction in manufacturing employment in absolute terms. At the same time, however, it does not mean a fall in the volume of goods produced: on the contrary. These two facts can only be reconciled by a dramatic increase in productivity leading to a fall in the relative prices of manufactured goods as opposed to the growing demand for services.
This note describes the general trend as well as the main phenomena that are at play: a consumer preference for services when their purchasing power increases and an intense international competition leading to further productivity gains and specialisation. [More in the publication ...]
STU 2-04 was finalised on 14 May 2004.
Sectoral accounts and analyses > Analyses and applications
Structural studies > Globalisation, international trade and offshoring
Macroeconomic forecasts and analyses > Short-term forecasts and business cycle